The Monetary Policy Committee of the Central Bank of the Gambia has on Monday 4th February 2013 met the Press at the Conference Hall of the Central Bank in which Governor Amadou Colley read the following Press Release.
Since the previous meeting of the Monetary Policy Committee (MPC), global economic prospects have improved modestly and that although global economic growth is estimated to have decelerated to 3.2 percent in 2012 from 3.9 percent in 2011, output is projected to strengthen gradually through 2013, averaging 3.5 percent.
According to him, a further strengthening to 4.1 percent is expected in 2014 and that there are, however, downside risks to the outlook including slow recovery in the Euro Area and excessive near-term fiscal consolidation in the United States.
For advanced economies Governor Colley said, economic growth is projected at 1.4 percent in 2013 from the 1.6 percent projected earlier and that Economic activity in emerging and developing economies remains robust thanks to supportive policies. Growth is expected to reach 5.5 percent in 2013 from 5.1 percent in 2012.
According to the Gambia Bureau of Statistics he went to inform the press, real gross domestic product (GDP) of The Gambian economy is estimated to have grown by 4.0 percent in 2012 following a contraction of 4.3 percent in 2011 and that Preliminary projections indicate that output would expand by 10.0 percent in 2013 premised on strong growth of agriculture and tourism.
Governor Colley asserted that the pace of monetary expansion moderated in line with expectations and that Money supply grew by 7.8 percent in 2012 compared to 11.0 percent in 2011 and the target of 8.5 percent.
With regard to Reserve money, he noted that the Bank's operating target rose by 6.8 percent compared to 15.6 percent in 2011 and that Reserve money was projected to grow by 5.8 percent in 2012.
In order to ensure effective transmission of monetary policy he said, it is essential to continue strengthening the resilience of banks and that Bank soundness is also critical to protect depositors and other creditors as well as ensuring an appropriate provision of credit to the economy.
With regard the banking industry, he noted that banking industry remains fundamentally sound and that the industry's capital and reserves increased to D3.06 billion in December 2012 compared to D2.63 billion in 2011 mainly on account of capital injection totaling D392.4 million. He went on to say that the average risk-weighted capital adequacy ratio also increased to 33.0 percent compared to 25.1 percent in 2011 and the minimum requirement of 10 percent and that the gearing ratio was only 3.03 times, lower than the 4.0 times in 2011 and the prudential ceiling of 10 times.
CB Governor asserted that total industry assets increased to D20.6 billion, or 10.5 percent from 2011, Loans and advances, accounting for 26.4 percent of total assets, decreased to D5.3 billion, or 2.4 percent from a year ago and that Credit to distributive trade, building and construction and other commercial loans increased by 5.0 percent, 11.0 percent and 26.0 percent respectively.
In contrast he said, advances to agriculture, transportation and tourism declined by 3.0 percent, 6.0 percent and 5.0 percent respectively and that the non-performing loan ratio decreased to 11.6 percent of gross loans, lower than the 1 2. percent in 2011.
With regard to Deposit liabilities, he said it has rose to D13.08 billion, or 2.1 percent over 2011, the loan to deposit ratio decreased to 41.6 percent against 44.1 percent in 2011 and that the liquidity ratio was 78 percent in 2012, or an increase of 4.0 percent from 2011.
Governor went on to inform the press that the industry's net profit rose from only D12.2 million in 2011 to D102.2 million in 2012 and that the return on assets and return on equity increased to 1.98 percent and 3.33 percent compare to 0.26 percent and 0.46 percent respectively in 2011.
According to CB Governor, the outstanding domestic debt increased to D10.7 billion (37 percent of GDP) in 2012, or 14.3 percent from a year ago and that Treasury bills and Sukuk Al-Salam combined and accounting for 80.0 percent of the domestic debt rose to D8.6 billion, or 21.0 percent and that he said the yield on all the maturity profiles increased in 2012 with the exception of the 364-day bills and that the yield on the 91-day and 182-day bills increased to 9.53 percent and 10.21 percent from 8.07 percent and 10.18 percent in 2011.
Similarly he said, the yield on the SAS bills rose to 9.77 percent from 9.07 percent during the same period and that in contrast, the yield on the 364-day bills declined to 10.9 percent from 11.85 percent in December 2011.
On Provisional balance of payments CB Governor said, estimates for the first nine months of 2012 indicate an overall deficit of US$8.19 million compared to a surplus of US$64.14 million in the corresponding period a year ago and that the current account balance, including current transfers, was in a surplus of US$19.16 million, lower than the surplus of US$64.47 million a year ago.
The surplus in the capital and financial accounts he said, decreased slightly to US$28.35 million compared to US$30.55 million in the corresponding period in 2011.
CB Governor went on to inform the press that Gross international reserves stood at US$184.5 million as at end December 2012, equivalent to about 5.0 months of imports of goods and services and that the Volume of transactions in the domestic foreign exchange market, measured by aggregate purchases and sales, increased to US$1.6 billion in 201 2 from US$1 .4 billion in 2011.
With regard to the Dalasi, Governor Kolley asserted that the Dalasi weakened against all major international currencies traded in the foreign exchange market and that Year-on-year to end-December 2012, the Dalasi depreciated against the US dollar by 11.6 percent, Pound Sterling (18.0 percent) and Euro (11.5 percent).
He indicated that Preliminary estimates of government fiscal operations in 2012 showed a lower deficit (including grants) of 4.4 percent of GDP compared to 4.6 percent of GDP in 2011 and that total revenue and grants increased to D6.5 billion (22.5 percent of GDP) or 15.7 percent from 2011. Government expenditure and net lending also rose to D7.7 billion (26.9 percent of GDP), or 13.6 percent from 2011.
On End-period inflation, he said End-period inflation measured by the National Consumer Price Index (NCPI), increased slightly to 4.9 percent in December 2012 from 4.4 percent in December 2011 and that Average inflation (12-month moving average) was 4.5 percent compared to 5.4 percent a year earlier.
Consumer food inflation fell slightly to 5.6 percent in December 2012 from 5.7 percent in December 201 1 and that Non-food inflation, on the other hand, increased to 4.0 percent from 2.4 percent in December 2011 he posited.
He told the press that Core inflation, which excludes the prices of energy, utility and volatile food items, increased slightly to 4.9 percent from 4.3 percent in December 2011.
On Inflation Outlook Governor noted that inflation is forecast to remain in single digit consistent with the pace of monetary expansion and that the MPC, however, assesses the balance of risks to the inflation outlook to be on the upside given heightened inflationary expectations.
Central Governor concluded that in the light of these developments, the MPC is of the view that the current monetary policy stance is appropriate and has therefore decided to leave the Rediscount Rate, the Bank's policy rate, unchanged at 12.0 percent and that the MPC would continue to monitor price developments and to take action consistent with its mandate to keep inflation low and non-volatile.